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Orla Mining (TSX: OLA) has expanded its land position in Nevada with the acquisition of Contact Gold (TSXV: C) and its two exploration-stage properties that together hold 117.4 km2 of target-rich mineral tenures.
In a press release Monday, the precious metals miner said a definitive agreement has been reached for an all-share transaction, whereby each Contact share will be exchanged for 0.0063 of an Orla common share, equivalent to C$0.03 per Contact share or a total purchase price of approximately $8.1 million.
This purchase price represents a 77% premium based on the companies’ 20-day volume weighted average price as of the previous trading day. Following the completion, Contact shareholders will own approximately 0.7% of Orla’s outstanding shares.
Shares in Contact Gold surged 83.3% to C$0.028 by midday Monday on the announcement, giving the Canadian junior a market capitalization of C$7.9 million. Meanwhile, Orla Mining’s stock was down 7.3% to C$4.55 apiece for a market capitalization of C$1.4 billion.
This move, says Orla, allows the company to consolidate landholdings within the Railroad-Pinion district, combining its core growth project, South Railroad, with Contact’s 45-km2 Pony Creek oxide gold project located next doors. Both project are located on the famed Carlin trend of Nevada.
South Railroad represents a feasibility-stage, open-pit mine project that Orla is advancing towards a construction decision. It currently hosts 1.8 million oz. of measured and indicated mineral resources at 0.74 g/t gold, and 719,000 oz. of inferred mineral resources at 1.00 g/t gold. Pony Creek would have potential to add to this resource; there are three mineralized zones with a total inferred resource of 433,000 oz. at 0.52 g/t gold.
“This transaction strengthens our land position in Nevada along the Carlin trend. Contact’s Pony Creek property is a valuable complement to our South Railroad project, one our key growth opportunities,” Orla CEO Jason Simpson said in a news release. “We look forward to making the necessary investments to unlock the combined potential of this now larger, contiguous and highly prospective land package.”
The company likens the South Railroad project to its flagship Camino Rojo oxide mine in Mexico, which declared commercial production in April 2022 and produced 109,596 oz. of gold that year, followed by 121,877 oz. in 2023.
In addition to Pony Creek, Contact also owns the Green Springs property in the southern end of Nevada’s Cortez trend. This is an early-stage exploration project in which Centerra Gold currently has an earn-in right of 70% through the completion of a four-year, C$10 million exploration program.
In a separate release Monday, Orla announced that Fairfax Financial Holdings (TSX: FFH/FFH.U) has bolstered its equity stake in the company to approximately 17.58%, purchasing another 800,000 shares, or 0.25% of those outstanding, at the average price of C$4.88 per share.
